UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 10-Q

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1 Table of Contents (Mark One) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: July 31, 2016 Or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number HEWLETT PACKARD ENTERPRISE COMPANY (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 3000 Hanover Street, Palo Alto, California (Address of principal executive offices) (Zip code) (650) (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company o Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x The number of shares of Hewlett Packard Enterprise Company common stock outstanding as of August 31, 2016 was 1,665,537,308 shares, par value $0.01.

2 Table of Contents Form 10-Q For the Quarterly Period Ended July 31, 2016 Table of Contents Page Forward-Looking Statements 3 Part I. Financial Information Item 1. Financial Statements and Supplementary Data 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 57 Item 3. Quantitative and Qualitative Disclosures About Market Risk 76 Item 4. Controls and Procedures 76 Part II. Other Information Item 1. Legal Proceedings 77 Item 1A. Risk Factors 77 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 78 Item 5. Other Information 79 Item 6. Exhibits 79 Signature 80 Exhibit Index 81 2

3 Table of Contents Forward-Looking Statements This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I, contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Hewlett Packard Enterprise Company and its consolidated subsidiaries ("Hewlett Packard Enterprise") may differ materially from those expressed or implied by such forward-looking statements and assumptions. The words "believe", "expect", "anticipate", "optimistic", "intend", "aim", "will", "should" and similar expressions are intended to identify such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred tax assets, share repurchases, currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges; any statements of the plans, strategies and objectives of management for future operations, including the previously announced spin-off and merger of our non-core software assets, spin-off and merger of our Enterprise Services business, and the completed separation transaction and the future performance of the post-separation company, as well as the execution of restructuring plans and any resulting cost savings, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Hewlett Packard Enterprise and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing Hewlett Packard Enterprise's businesses; the competitive pressures faced by Hewlett Packard Enterprise's businesses; risks associated with executing Hewlett Packard Enterprise's strategy, including the planned spin-off and merger of our non-core software assets, spin-off and merger of our Enterprise Services business; the impact of macroeconomic and geopolitical trends and events; the need to manage third-party suppliers and the distribution of Hewlett Packard Enterprise's products and the delivery of Hewlett Packard Enterprise's services effectively; the protection of Hewlett Packard Enterprise's intellectual property assets, including intellectual property licensed from third parties and intellectual property shared with its former Parent; risks associated with Hewlett Packard Enterprise's international operations; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; the execution and performance of contracts by Hewlett Packard Enterprise and its suppliers, customers, clients and partners; the hiring and retention of key employees; integration and other risks associated with business combination and investment transactions; the results of the separation transaction and the execution, timing and results of any restructuring plans, including the anticipated benefits of the separation transaction and restructuring plans; the resolution of pending investigations, claims and disputes; and other risks that are described herein, including but not limited to the items discussed in "Risk Factors" in Item 1A of Part I of Hewlett Packard Enterprise's Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and that are otherwise described or updated from time to time in Hewlett Packard Enterprise's reports filed with the Securities and Exchange Commission. Hewlett Packard Enterprise assumes no obligation and does not intend to update these forward-looking statements. 3

4 Table of Contents Part I. Financial Information Item 1. Financial Statements and Supplementary Data. Index Condensed Consolidated and Combined Statements of Earnings for the three and nine months ended July 31, 2016 and Condensed Consolidated and Combined Statements of Comprehensive Income for the three and nine months ended July 31, 2016 and Condensed Consolidated Balance Sheets as of July 31, 2016 and as of October 31, 2015 (Audited) 7 Condensed Consolidated and Combined Statements of Cash Flows for the nine months ended July 31, 2016 and Notes to Condensed Consolidated and Combined Financial Statements 9 Note 1: Overview and Basis of Presentation 9 Note 2: Segment Information 12 Note 3: Restructuring 17 Note 4: Retirement and Post-Retirement Benefit Plans 18 Note 5: Stock-Based Compensation 20 Note 6: Taxes on Earnings 23 Note 7: Balance Sheet Details 25 Note 8: Financing Receivables and Operating Leases 27 Note 9: Acquisitions and Divestitures 29 Note 10: Goodwill and Intangible Assets 31 Note 11: Fair Value 33 Note 12: Financial Instruments 36 Note 13: Borrowings 43 Note 14: Related Party Transactions and Former Parent Company Investment 45 Note 15: Stockholders' Equity 47 Note 16: Net Earnings Per Share 49 Note 17: Litigation and Contingencies 50 Note 18: Guarantees, Indemnifications and Warranties 54 Note 19: Equity Method Investments 55 Page 4

5 Table of Contents Condensed Consolidated and Combined Statements of Earnings Net revenue: Three Months Ended July 31, Nine Months Ended July 31, In millions, except per share amounts Products $ 4,528 $ 4,811 $ 14,509 $ 14,190 Services 7,588 8,157 22,866 24,196 Financing income Total net revenue 12,210 13,057 37,645 38,659 Costs and expenses: Cost of products 2,997 3,241 9,623 9,446 Cost of services 5,576 6,008 17,012 18,077 Financing interest Research and development ,764 1,686 Selling, general and administrative 1,938 2,040 5,957 5,987 Amortization of intangible assets Restructuring charges Acquisition and other related charges Separation costs Defined benefit plan settlement charges Impairment of data center assets Gain on H3C divestiture (2,169) (2,169) Total costs and expenses 9,713 12,813 34,272 37,255 Earnings from operations 2, ,373 1,404 Interest and other, net (18) 4 (212) (42) Loss from equity interests (72) (72) (2) Earnings before taxes 2, ,089 1,360 Provision for taxes (135) (24) (230) (284) Net earnings $ 2,272 $ 224 $ 2,859 $ 1,076 Net earnings per share: (1) Basic $ 1.35 $ 0.13 $ 1.66 $ 0.60 Diluted $ 1.32 $ 0.13 $ 1.64 $ 0.59 Cash dividends declared per share $ 0.06 $ $ 0.22 $ Weighted-average shares used to compute net earnings per share: (1) Basic 1,681 1,804 1,722 1,804 Diluted 1,715 1,834 1,748 1,834 (1) On November 1, 2015, HP Inc. distributed a total of 1.8 billion shares of Hewlett Packard Enterprise common stock to HP Inc. stockholders as of the record date. For comparative purposes, the same number of shares used to compute basic and diluted net earnings per share ("EPS") for the fiscal year ended October 31, 2015 is used for the calculation of basic and diluted net EPS for all periods in fiscal See Note 16, "Net Earnings Per Share", for further details. The accompanying notes are an integral part of these Condensed Consolidated and Combined Financial Statements. 5

6 Table of Contents Condensed Consolidated and Combined Statements of Comprehensive Income Three Months Ended July 31, Nine Months Ended July 31, Net earnings $ 2,272 $ 224 $ 2,859 $ 1,076 Other comprehensive income (loss) before taxes: Change in net unrealized gains (losses) on available-for-sale securities: Net unrealized gains (losses) arising during the period (4) (Gains) losses reclassified into earnings (1) 3 Change in net unrealized gains (losses) on cash flow hedges: (4) Net unrealized gains arising during the period Net gains reclassified into earnings (19) (71) (210) (370) Change in unrealized components of defined benefit plans: (102) 45 Losses arising during the period (13) (14) Amortization of actuarial loss and prior service benefit Curtailments, settlements and other 1 (16) Change in cumulative translation adjustment (183) (44) (265) (112) Other comprehensive income (loss) before taxes (169) 34 (Provision) benefit for taxes (46) (14) 7 (36) Other comprehensive (loss) income, net of tax (10) 93 (162) (2) Comprehensive income $ 2,262 $ 317 $ 2,697 $ 1,074 The accompanying notes are an integral part of these Condensed Consolidated and Combined Financial Statements. 6

7 Table of Contents Condensed Consolidated Balance Sheets Current assets: ASSETS As of July 31, 2016 October 31, 2015 In millions, except par value Cash and cash equivalents $ 10,743 $ 9,842 Accounts receivable 6,951 8,538 Financing receivables 3,030 2,918 Inventory 1,848 2,198 Assets held for sale 906 Other current assets 4,992 6,468 Total current assets 28,470 29,964 Property, plant and equipment 9,579 9,886 Long-term financing receivables and other assets 12,715 10,875 Investments in equity interests 2,675 Goodwill 24,171 27,261 Intangible assets 1,211 1,930 Total assets $ 78,821 $ 79,916 Current liabilities: LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable and short-term borrowings $ 911 $ 691 Accounts payable 5,030 5,828 Employee compensation and benefits 2,206 2,902 Taxes on earnings Deferred revenue 4,749 5,154 Accrued restructuring Liabilities held for sale 197 Other accrued liabilities 5,412 6,314 Total current liabilities 19,484 21,993 Long-term debt 15,354 15,103 Other liabilities 11,157 8,902 Commitments and contingencies Stockholders' equity HPE stockholders' equity: Preferred stock, $0.01 par value (300 shares authorized; none issued and outstanding at July 31, 2016) Common stock, $0.01 par value (9,600 shares authorized; 1,664 shares issued and outstanding at July 31, 2016) 17 Additional paid-in capital 35,100 Retained earnings 2,486 Former Parent company investment 38,550 Accumulated other comprehensive loss (5,177) (5,015) Total HPE stockholders' equity 32,426 33,535 Non-controlling interests Total stockholders' equity 32,826 33,918 Total liabilities and stockholders' equity $ 78,821 $ 79,916 The accompanying notes are an integral part of these Condensed Consolidated and Combined Financial Statements.

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9 Table of Contents Condensed Consolidated and Combined Statements of Cash Flows Cash flows from operating activities: Nine Months Ended July 31, In millions Net earnings $ 2,859 $ 1,076 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,903 2,959 Stock-based compensation expense Provision for doubtful accounts Provision for inventory Restructuring charges Deferred taxes on earnings (1,012) (876) Excess tax benefit from stock-based compensation (9) (92) Gain on H3C divestiture (2,169) Loss from equity interests 72 2 Other, net Changes in operating assets and liabilities, net of acquisitions: (1) Accounts receivable Financing receivables (252) (128) Inventory 3 (464) Accounts payable (683) 7 Taxes on earnings 781 1,332 Restructuring (746) (813) Other assets and liabilities (1,542) (932) Net cash provided by operating activities 2,746 3,819 Cash flows from investing activities: Investment in property, plant and equipment (2,412) (2,606) Proceeds from sale of property, plant and equipment Purchases of available-for-sale securities and other investments (540) (173) Maturities and sales of available-for-sale securities and other investments Payments made in connection with business acquisitions, net of cash acquired (22) (2,617) Proceeds from business divestitures, net 2, Net cash provided by (used in) investing activities 630 (4,834) Cash flows from financing activities: Short-term borrowings with original maturities less than 90 days, net (51) (77) Issuance of debt Payment of debt (568) (690) Settlement of cash flow hedge 3 Issuance of common stock under employee stock plans 79 Repurchase of common stock (2,662) Net transfer from former Parent 491 1,519 Excess tax benefit from stock-based compensation 9 92 Cash dividends paid (281) (10) Net cash (used in) provided by financing activities (2,198) 1,470 Increase in cash and cash equivalents 1, Cash held for sale (1) (277) Cash and cash equivalents at beginning of period 9,842 2,319 Cash and cash equivalents at end of period $ 10,743 $ 2,774

10 (1) The impact of assets and liabilities reclassified as held for sale during the period was not considered in the changes in operating assets and liabilities, net of acquisitions, within cash flows from operating activities. See Note 9 "Acquisition and Divestitures" for more details on the assets and liabilities reclassified as held for sale. The accompanying notes are an integral part of these Condensed Consolidated and Combined Financial Statements. 8

11 Note 1: Overview and Basis of Presentation Background Notes to Condensed Consolidated and Combined Financial Statements Hewlett Packard Enterprise Company ("we", "us", "our", "Hewlett Packard Enterprise", "HPE" or "the Company") is a leading global provider of the cuttingedge technology solutions customers need to optimize their traditional information technology ("IT") while helping them build the secure, cloud-enabled, mobileready future that is uniquely suited to their needs. Our customers range from small- and medium-sized businesses ("SMBs") to large global enterprises. On November 1, 2015, the Company became an independent, publicly-traded company through a pro-rata distribution by HP Inc., formerly known as Hewlett-Packard Company ("former Parent"), of 100% of the outstanding shares of Hewlett Packard Enterprise Company to HP Inc.'s stockholders. Each HP Inc. stockholder of record received one share of Hewlett Packard Enterprise common stock for each share of HP Inc. common stock held on the record date. Approximately 1.8 billion shares of Hewlett Packard Enterprise common stock were distributed on November 1, 2015 to HP Inc. stockholders. In connection with the separation, Hewlett Packard Enterprise's common stock began trading "regular-way" under the ticker symbol "HPE" on the New York Stock Exchange on November 2, Basis of Presentation Prior to October 31, 2015, the Combined Financial Statements were derived from the Consolidated Financial Statements and accounting records of former Parent, as if the Company was operating on a standalone basis during the periods presented. From and after October 31, 2015, substantially all of the assets and liabilities and operations of the Company were transferred from former Parent to the Company, and the Condensed Consolidated and Combined Financial Statements included the accounts of the Company and its wholly-owned subsidiaries in accordance with the separation agreement for the transfer from former Parent to the Company. These Condensed Consolidated and Combined Financial Statements of the Company were prepared in connection with the separation and in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP"). In the opinion of management, the accompanying unaudited Condensed Consolidated and Combined Financial Statements of Hewlett Packard Enterprise contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position as of July 31, 2016 and October 31, 2015, its results of operations for the three and nine months ended July 31, 2016 and 2015 and its cash flows for the nine months ended July 31, 2016 and The results of operations and cash flows for the nine months ended July 31, 2016 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2015, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Combined and Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, included therein. Principles of Consolidation and Combination The accompanying unaudited Condensed Consolidated and Combined Financial Statements include the accounts of the Company and other subsidiaries and affiliates in which the Company has a controlling financial interest or is the primary beneficiary. All intercompany transactions and accounts within the consolidated and combined businesses of the Company have been eliminated. Prior to the separation, intercompany transactions between the Company and former Parent are considered to be effectively settled in the Condensed Consolidated and Combined Financial Statements at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Condensed Consolidated and Combined Statements of Cash Flows within financing activities and within the stockholders' equity section of the Condensed Consolidated Balance Sheets in Former Parent company investment. The Company accounts for investments in companies over which it has the ability to exercise significant influence but does not hold a controlling interest under the equity method of accounting, and the Company records its proportionate share of income or losses in earnings (loss) from equity interests in the Condensed Consolidated and Combined Statements of Earnings. The Company's proportionate share of losses in its equity method investments previously included in Interest and other, net, and Other, net, in the Condensed Consolidated and Combined Statements of Earnings and Condensed Consolidated and Combined 9

12 Statements of Cash Flows, respectively, for all prior periods, were reclassified to Loss from equity interests to conform to the current year presentation. Non-controlling interests are presented as a separate component within Total stockholders' equity in the Condensed Consolidated Balance Sheets. Net earnings attributable to non-controlling interests are recorded within Interest and other, net in the Condensed Consolidated and Combined Statements of Earnings and are not presented separately, as they were not material for any period presented. September 2016 Announcement of Spin-Off and Merger of Non-Core Software Assets On September 7, 2016, the Company announced plans for a spin-off and merger of its non-core software assets ( Seattle Assets ) with Micro Focus International plc ( Micro Focus ) (collectively, the Seattle Transaction ), which will create a pure-play enterprise software company. Upon the completion of the Seattle Transaction, which is currently targeted to be completed by the second half of fiscal 2017, shareholders of Hewlett Packard Enterprise Company will own shares of both Hewlett Packard Enterprise and 50.1% of the new combined company. The transaction is subject to certain customary closing conditions including approval by Micro Focus shareholders, the effective filing of related registration statements, regulatory approvals, the anticipated tax treatment of the Transaction, the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain required foreign anti-trust approvals. May 2016 Announcement of Enterprise Services Business Spin-Off and Merger On May 24, 2016, the Company announced plans for a tax-free spin-off and merger of its Enterprise Services business ("Everett") with Computer Sciences Corporation ("CSC") (collectively, the "Everett Transaction"), which will create a pure-play, global IT services company (collectively, the "Everett Transaction"). Upon the completion of the transaction, which is currently targeted to be completed by March 31, 2017, shareholders of Hewlett Packard Enterprise Company will own shares of both Hewlett Packard Enterprise and approximately fifty percent of the new combined company. The Everett transaction is subject to certain customary closing conditions including approval by CSC shareholders, the effective filing of related registration statements, completion of a tax-free spin-off, Everett debt exchange, the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain required foreign anti-trust approvals. Segment Realignment The Company has implemented certain segment and business unit realignments in order to align its segment financial reporting more closely with its current business structure. Reclassifications of certain prior year segment and business unit financial information have been made to conform to the current-year presentation. None of the changes impact the Company's previously reported consolidated net revenue, earnings from operations, net earnings or net earnings per share ("EPS"). See Note 2, "Segment Information", for a further discussion of the Company's segment realignment. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company's Condensed Consolidated and Combined Financial Statements and accompanying notes. Actual results could differ materially from those estimates. Accounting Pronouncements In August 2016, the Financial Accounting Standard Board ( FASB ) amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company is required to adopt the guidance in the first quarter of fiscal The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated and Combined Financial Statements. In June 2016, the FASB amended the existing accounting standards for the measurement of credit losses. The amendments require an entity to estimate its lifetime expected credit loss for most financial instruments, including trade and lease receivables, and record an allowance for the portion of the amortized cost the entity does not expect to collect. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. The Company is required to adopt the guidance in the first quarter of fiscal

13 Early adoption is permitted beginning in fiscal The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated and Combined Financial Statements. In March 2016, the FASB amended the existing accounting standards for employee share-based payment arrangements. The amendments require all excess tax benefits and tax deficiencies associated with share-based payments to be recognized as income tax expense or income tax benefit, respectively, rather than as additional paid-in capital. The amendments also increase the amount an employer can withhold in order to cover income taxes on awards, allows companies to recognize forfeitures of awards as they occur, and requires companies to present excess tax benefits from stock-based compensation as an operating activity in the statement of cash flows rather than as a financing activity. The Company is required to adopt the guidance in the first quarter of fiscal Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated and Combined Financial Statements. In February 2016, the FASB amended the existing accounting standards for leases. The amendments require lessees to record, at lease inception, a lease liability for the obligation to make lease payments and a right-of-use ("ROU") asset for the right to use the underlying asset for the lease term on their balance sheets. Lessees may elect to not recognize lease liabilities and ROU assets for most leases with terms of 12 months or less. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset will be based on the liability, adjusted for lease prepayments, lease incentives received, and the lessee's initial direct costs. For finance leases, lease expense will be the sum of interest on the lease obligation and amortization of the ROU asset, resulting in a front-loaded expense pattern. For operating leases, lease expense will generally be recognized on a straight-line basis over the lease term. The amended lessor accounting model is similar to the current model, updated to align with certain changes to the lessee model and the new revenue standard. The current saleleaseback guidance, including guidance applicable to real estate, is also replaced with a new model for both lessees and lessors. The Company is required to adopt the guidance in the first quarter of fiscal 2020 using a modified retrospective approach. Early adoption is permitted. The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated and Combined Financial Statements. In November 2015, the FASB amended the existing accounting standards for income taxes. The amendment requires companies to report their deferred tax liabilities and deferred tax assets each as a single non-current item on their classified balance sheets. The Company elected to adopt the amendments in the first quarter of fiscal 2016 and applied them retrospectively to all periods presented, as permitted by the standard. The adoption of the amendments had no impact to its net earnings or cash flows from operations for any period presented. The following table presents the Condensed Consolidated Balance Sheet under the historical accounting method for deferred taxes and as adjusted to reflect the adoption of the amendments: October 31, 2015 Historical Accounting Method Effect of Adoption As Adjusted In millions Other current assets $ 7,677 $ (1,209) $ 6,468 Long-term financing receivables and other assets $ 11,020 $ (145) $ 10,875 Taxes on earnings $ (634) $ 158 $ (476) Other liabilities $ (10,098) $ 1,196 $ (8,902) In September 2015, the FASB amended the existing accounting standards to simplify the accounting for measurement period adjustments to provisional amounts recognized in a business combination. The amendments require all such adjustments to be recognized in the period they are determined. Adjustments related to previous reporting periods since the acquisition date must be disclosed by income statement line item, either on the face of the income statement or within the footnotes. The Company elected to early adopt the amendments in the first quarter of fiscal 2016, as permitted by the standard. The adoption of the amendments did not have a material impact on the Company's Condensed Consolidated and Combined Financial Statements. See Footnote 9, "Acquisitions and Divestitures", for additional information on measurement period adjustments recognized during the nine months ended July 31, In April 2015, the FASB amended the existing accounting standards for intangible assets. The amendments provide explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement, wherein the arrangements that do not convey a software license to the customer are accounted for as service contracts. The amendments also eliminate the practice of accounting for software licenses as executory contracts which may result in more software assets being 11

14 capitalized. The Company is required to adopt the guidance in the first quarter of fiscal 2017; however early adoption is permitted, as is retrospective application. The adoption of these amendments is not expected to have a material impact on the Company's Condensed Consolidated and Combined Financial Statements. In April 2015, the FASB amended the existing accounting standards for imputation of interest. The amendments require that debt issuance costs related to a recognized debt liability be presented on the classified balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected by these amendments. The Company is required to adopt the guidance in the first quarter of fiscal Early adoption is permitted. The amendments should be applied retrospectively with the adjusted balance sheet of each individual period presented, in order to reflect the period-specific effects of applying the new guidance. The adoption of these amendments is not expected to have a material impact on the Company's Condensed Consolidated and Combined Financial Statements. In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued an accounting standard update for a one-year deferral of the effective date, with an option of applying the standard on the original effective date, which for the Company is the first quarter of fiscal In accordance with this deferral, the Company is required to adopt these amendments in the first quarter of fiscal The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of these amendments and the transition alternatives on its Condensed Consolidated and Combined Financial Statements. Note 2: Segment Information Hewlett Packard Enterprise's operations are organized into five segments for financial reporting purposes: the Enterprise Group ("EG"), Enterprise Services ("ES"), Software, Financial Services ("FS") and Corporate Investments. Hewlett Packard Enterprise's organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by Hewlett Packard Enterprise's management to evaluate segment results. A summary description of each segment follows. The Enterprise Group provides servers, storage, networking and technology services that, when combined with Hewlett Packard Enterprise's Cloud solutions, enable customers to manage applications across virtual private cloud, private cloud and traditional IT environments. Described below are the business units and capabilities within EG. Servers offers both Industry Standard Servers ("ISS") as well as Mission-Critical Servers ("MCS") to address the full array of our customers' computing needs. ISS provides a range of products, from entry level servers through premium HPE ProLiant servers, which run primarily on Windows, Linux and virtualization platforms from software providers including Microsoft Corporation ("Microsoft") and VMware, Inc. ("VMware") and open sourced software from other major vendors while leveraging x86 processors from Intel Corporation ("Intel") and Advanced Micro Devices ("AMD"). For the most mission-critical workloads, HPE delivers Integrity servers based on the Intel Itanium processor, HPE Integrity NonStop solutions and mission critical x86 ProLiant servers. Storage offers Converged Storage solutions and traditional storage. Converged Storage solutions include 3PAR StoreServ, StoreOnce, and StoreVirtual products. Traditional storage includes tape, storage networking and legacy external disk products such as EVA and XP. Networking offers wireless local area network equipment, mobility and security software, switches, routers, and network management products that span data centers, campus and branch environments and deliver software defined networking and unified communications capabilities. Technology Services provides support services and technology consulting to integrate and optimize EG's hardware platforms for the new style of IT. These services are available in the form of service contracts, pre-packaged offerings or on a customized basis. 12

15 Enterprise Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains within traditional and Strategic Enterprise Service offerings which includes analytics and data management, security and cloud services. Described below are the business units and capabilities within ES. Infrastructure Technology Outsourcing delivers comprehensive services that encompass the management of data centers, IT security, cloud computing, workplace technology, networks, unified communications and enterprise service management. Application and Business Services helps clients develop, revitalize and manage their applications and information assets and provides end-to-end, industry-specific business process services. Software provides big data analytics and applications, enterprise security, application testing and delivery management and IT operations management solutions for businesses and other enterprises of all sizes. These software offerings include licenses, support, professional services and software-as-a-service ("SaaS"). Financial Services provides flexible investment solutions, such as leasing, financing, IT consumption and utility programs and asset management services, for customers to enable the creation of unique technology deployment models and acquire complete IT solutions, including hardware, software and services from Hewlett Packard Enterprise and others. Providing flexible services and capabilities that support the entire IT life cycle, FS partners with customers globally to help build investment strategies that enhance their business agility and support their business transformation. FS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities. Corporate Investments includes Hewlett Packard Labs and certain cloud-related business incubation projects among others. Segment Policy Hewlett Packard Enterprise derives the results of the business segments directly from its internal management reporting system. The accounting policies that Hewlett Packard Enterprise uses to derive segment results are substantially the same as those used to derive consolidated results. Management measures the performance of each segment based on several metrics, including earnings from operations. Management uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the segments. Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm'slength basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as leases by FS to our customers. Hewlett Packard Enterprise's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements. Hewlett Packard Enterprise periodically engages in intercompany advanced royalty payment and licensing arrangements that may result in advance payments between subsidiaries. Revenues from these intercompany arrangements are deferred and recognized as earned over the term of the arrangement by the Hewlett Packard Enterprise legal entities involved in such transactions; however, these advanced payments are eliminated from revenues as reported by Hewlett Packard Enterprise and its business segments. As disclosed in Note 6, "Taxes on Earnings", Hewlett Packard Enterprise executed intercompany advanced royalty payment arrangements resulting in advanced payments of $3.7 billion and $5.0 billion during fiscal 2016 and 2015 respectively. In these transactions, the payments were received in the U.S. from a foreign consolidated affiliate, with a deferral of intercompany revenues over the term of the arrangements, approximately 5 years. The impact of these intercompany arrangements are eliminated from both Hewlett Packard Enterprise consolidated and segment net revenues. Financing interest in the Condensed Consolidated and Combined Statements of Earnings reflects interest expense on borrowing- and funding-related activities associated with FS and its subsidiaries, and debt issued by Hewlett Packard Enterprise for which a portion of the proceeds benefited FS. Prior to October 9, 2015, such financing interest expense resulted from debt issued by Hewlett-Packard Company. Hewlett Packard Enterprise does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate governance costs, stock-based compensation expense, amortization of intangible assets, restructuring charges, acquisition and other related charges, separation costs, defined benefit 13

16 plan settlement charges, impairment of data center assets, gain on H3C divestiture, interest and other costs and loss from equity interests. Segment Realignment Effective at the beginning of the first quarter of fiscal 2016, the Company implemented organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes resulted in: (i) within the Enterprise Group segment, the consolidation of the Industry Standard Servers and Business Critical Systems business units into the newly formed Servers business unit; and (ii) the transfer of certain cloud-related marketing headcount activities from the Corporate Investment segment to the Enterprise Group segment. The Company reflected these changes to its segment information retrospectively to the earliest period presented, which resulted in: (i) the consolidation of net revenue from the Industry Standard Servers and Business Critical Systems business units into the Servers business unit within the Enterprise Group segment; and (ii) the transfer of operating expenses from the Corporate Investment segment to the Enterprise Group segment. These changes had no impact on Hewlett Packard Enterprise's previously reported consolidated and combined net revenue, earnings from operations, net earnings or net earnings per share. In May 2016, Tsinghua Holdings subsidiary, Unisplendour Corporation, purchased 51% of the new business named H3C Technologies ("H3C"), comprising Hewlett Packard Enterprise s H3C Technologies and China-based servers, storage and technology services business which were previously reported within the EG segment. During the third quarter of fiscal 2016, the Company completed the sale of its assets and liabilities that were identified as part of the H3C transaction. The Company retained a 49% interest in the new company, which it recorded as an equity method investment. See Note 9, "Acquisitions and Divestitures" and Note 19, "Equity Method Investments" for additional information. During the third quarter of fiscal 2016, the Company signed a definitive agreement with The Blackstone Group to sell at least 84% and up to 100% of its equity stake in MphasiS Limited ("MphasiS" or MphasiS disposal group ) and as such, the transaction met all of the held for sale criteria. The financial results of MphasiS are reported within the ES segment. Accordingly, 100% of the assets and liabilities reported in the ES segment that were identified as part of the MphasiS transaction were reclassified as held for sale. On September 1, 2016, the Company completed the MphasiS divestiture. See Note 9, "Acquisitions and Divestitures" for additional information. There have been no material changes to the total assets of Hewlett Packard Enterprise's individual segments since October 31, 2015 with the exception of assets and liabilities sold as part of the H3C transaction in May 2016 and assets and liabilities reclassified as held for sale as a result of the MphasiS transaction during the third quarter of fiscal

17 Segment Operating Results Three months ended July 31, 2016 Enterprise Group Enterprise Services Software In millions Financial Services Corporate Investments Total Net revenue $ 6,223 $ 4,534 $ 666 $ 787 $ $ 12,210 Intersegment net revenue and other Total segment net revenue $ 6,476 $ 4,725 $ 738 $ 812 $ $ 12,751 Segment earnings (loss) from operations $ 815 $ 393 $ 131 $ 80 $ (83) $ 1,336 Three months ended July 31, 2015 Net revenue $ 6,674 $ 4,779 $ 821 $ 782 $ 1 $ 13,057 Intersegment net revenue and other Total segment net revenue $ 7,007 $ 4,976 $ 901 $ 807 $ 1 $ 13,692 Segment earnings (loss) from operations $ 881 $ 285 $ 185 $ 87 $ (109) $ 1,329 Nine months ended July 31, 2016 Net revenue $ 19,689 $ 13,559 $ 2,089 $ 2,305 $ 3 $ 37,645 Intersegment net revenue and other ,699 Total segment net revenue $ 20,537 $ 14,136 $ 2,292 $ 2,376 $ 3 $ 39,344 Segment earnings (loss) from operations $ 2,576 $ 948 $ 459 $ 253 $ (269) $ 3,967 Nine months ended July 31, 2015 Net revenue $ 19,683 $ 14,179 $ 2,452 $ 2,339 $ 6 $ 38,659 Intersegment net revenue and other ,760 Total segment net revenue $ 20,549 $ 14,786 $ 2,663 $ 2,415 $ 6 $ 40,419 Segment earnings (loss) from operations $ 2,862 $ 607 $ 501 $ 262 $ (308) $ 3,924 15

18 The reconciliation of segment operating results to Hewlett Packard Enterprise consolidated and combined results was as follows: Net Revenue: Three Months Ended July 31, Nine Months Ended July 31, In millions Total segments $ 12,751 $ 13,692 $ 39,344 $ 40,419 Elimination of intersegment net revenue and other (541) (635) (1,699) (1,760) Total Hewlett Packard Enterprise consolidated and combined net revenue $ 12,210 $ 13,057 $ 37,645 $ 38,659 Earnings before taxes: Total segment earnings from operations $ 1,336 $ 1,329 $ 3,967 $ 3,924 Corporate and unallocated costs and eliminations (128) (104) (429) (290) Stock-based compensation expense (129) (117) (432) (353) Amortization of intangible assets (210) (225) (629) (632) Restructuring charges (369) (24) (841) (404) Acquisition and other related charges (37) (46) (127) (69) Separation costs (135) (255) (305) (458) Defined benefit plan settlement charges (178) (178) Impairment of data center assets (136) (136) Gain on H3C divestiture 2,169 2,169 Interest and other, net (18) 4 (212) (42) Loss from equity interests (72) (72) (2) Total Hewlett Packard Enterprise consolidated and combined earnings before taxes $ 2,407 $ 248 $ 3,089 $ 1,360 16

19 Net revenue by segment and business unit was as follows: Three Months Ended July 31, Nine Months Ended July 31, In millions Servers $ 3,368 $ 3,520 $ 10,497 $ 10,447 Technology Services 1,745 1,880 5,378 5,800 Networking ,376 1,941 Storage ,286 2,361 Enterprise Group 6,476 7,007 20,537 20,549 Infrastructure Technology Outsourcing 2,866 3,036 8,579 9,039 Application and Business Services 1,859 1,940 5,557 5,747 Enterprise Services 4,725 4,976 14,136 14,786 Software ,292 2,663 Financial Services ,376 2,415 Corporate Investments Total segment net revenue 12,751 13,692 39,344 40,419 Elimination of intersegment net revenue and other (541) (635) (1,699) (1,760) Total Hewlett Packard Enterprise consolidated and combined net revenue $ 12,210 $ 13,057 $ 37,645 $ 38,659 Note 3: Restructuring Summary of Restructuring Plans Restructuring charges of $369 million and $24 million have been recorded by the Company for the three months ended July 31, 2016 and 2015, respectively, and restructuring charges of $841 million and $404 million have been recorded for the nine months ended July 31, 2016 and 2015, respectively, based on restructuring activities impacting the Company's employees and infrastructure. Restructuring activities related to the Company's employees and infrastructure, summarized by plan, are presented in the table below: Employee Severance Fiscal 2015 Plan Fiscal 2012 Plan Other Plans Infrastructure and other Employee Severance and EER Infrastructure and other Employee Severance Infrastructure and other Total In millions Liability as of October 31, 2015 $ 351 $ $ 321 $ 45 $ 1 $ 24 $ 742 Charges (2) 841 Cash payments (382) (100) (234) (19) (10) (745) Non-cash items (25) (50) (1) (1) (77) Liability as of July 31, 2016 $ 525 $ 39 $ 159 $ 26 $ 1 $ 11 $ 761 Total costs incurred to date, as of July 31, 2016 $ 932 $ 190 $ 3,964 $ 546 $ 1,997 $ 1,127 $ 8,756 Total costs expected to be incurred, as of July 31, 2016 $ 2,158 $ 423 $ 3,964 $ 546 $ 1,997 $ 1,127 $ 10,215 The current restructuring liability reported in Accrued restructuring in the Condensed Consolidated Balance Sheets at July 31, 2016 and October 31, 2015 was $613 million and $628 million, respectively. The long-term restructuring liability 17

20 reported in Other liabilities in the Condensed Consolidated Balance Sheets at July 31, 2016 and October 31, 2015 was $148 million and $114 million, respectively. Fiscal 2015 Restructuring Plan On September 14, 2015, former Parent's Board of Directors approved a restructuring plan (the "2015 Plan") in connection with the separation which will be implemented through fiscal As part of the 2015 Plan, the Company expects approximately 30,000 employees to exit the Company by the end of These workforce reductions are primarily associated with the Company's Enterprise Services segment. The changes to the workforce will vary by country, based on local legal requirements and consultations with employee works councils and other employee representatives, as appropriate. The Company estimates that it will incur aggregate pre-tax charges through fiscal 2018 of approximately $2.6 billion in connection with the 2015 Plan, of which approximately $2.2 billion relates to workforce reductions and $423 million primarily relates to real estate consolidation. Fiscal 2012 Restructuring Plan On May 23, 2012, former Parent adopted a multi-year restructuring plan (the "2012 Plan") designed to simplify business processes, accelerate innovation and deliver better results for customers, employees and stockholders. As of July 31, 2016 and October 31, 2015 the Company had eliminated 42,100 positions in connection with the 2012 Plan, with a portion of those employees exiting the Company as part of voluntary enhanced early retirement ("EER") programs in the U.S. and in certain other countries. During the first nine months of fiscal 2016, the Company recorded severance charges of $72 million and infrastructure charges of $1 million as a result of a change in the estimate of expected cash payouts. The Company recognized $4.5 billion in total aggregate charges in connection with the 2012 Plan, with approximately $4.0 billion related to workforce reductions, including the EER programs, and $546 million related to infrastructure, including data center and real estate consolidation and other items. The 2012 Plan is substantially complete and the severance and infrastructure related cash payments associated with the 2012 Plan are expected to be substantially paid out through fiscal Other Plans Restructuring plans initiated by former Parent in fiscal 2008 and 2010 were substantially completed as of April 30, Severance and infrastructure related cash payments associated with these plans are expected to be paid out through fiscal Note 4: Retirement and Post-Retirement Benefit Plans Pension Benefit Expense Prior to October 31, 2015 and with the exception of certain defined benefit pension plans, of which the Company was the sole sponsor, certain Hewlett Packard Enterprise eligible employees, retirees and other former employees participated in certain U.S. and international defined benefit pension plans offered by former Parent. These plans, whose participants included both Company employees and employees of the former Parent, were accounted for as multiemployer benefit plans, and the related net benefit plan obligations were not included in the Company's Combined Balance Sheets through July 31, The related benefit plan expense was allocated to the Company based on the Company's labor costs and allocations of corporate and other shared functional personnel. Substantially all plan assets and the related benefit obligations that were directly attributable to Hewlett Packard Enterprise eligible employees, retirees and other former employees were transferred to the Company as of October 31, The Company recognized total net pension and other post-retirement benefit expense in the Condensed Consolidated and Combined Statement of Earnings of $38 million and $16 million for the three months ended July 31, 2016 and 2015 respectively, and $108 million and $68 million for the nine months ended July 31, 2016 and 2015, respectively. The amount for the three and nine months ended July 31, 2015 includes a $15 million related benefit plan credit that was allocated to the Company by former Parent for the multiemployer pension plans. 18